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CIHM/iCMH 

Microfiche 

Series. 


CIHJVi/ICIVIH 
Collection  de 
microfiches. 


Canadian  Instituta  for  Kiatorical  Microraproductions  /  inatitut  onadian  da  microraproductiona  historiquaa 


Taehnical  and  Bibliographic  Notaa/Notat  tachniquaa  at  Mbliograplilquaa 


Tha  inatituta  liaa  attcmptad  to  obtain  tha  boat 
originai  copy  availabia  foi  fiiming.  Faaturaa  of  thia 
copy  which  may  ba  bibliographicaUy  uniqua. 
which  may  altar  any  of  tha  imagaa  in  tha 
raproduction.  or  which  may  algnifieantly  changa 
tha  uaual  mathod  of  filming,  ara  chackad  balow. 


D 


D 


0 

n 


n 


D 


Colourad  covers/ 
Couvartura  da  coulaur 


I     I   Covara  damagad/ 


Couvartura  andommagia 

Covars  rastorad  and/or  laminatad/ 
Couvartura  rastaurAa  at/ou  pallicul6a 

Cover  titia  missing/ 

La  titra  da  couvartura  manqua 


I     I   Colourad  maps/ 


Cartas  giograpMquaa  wn  coulaur 

Colourad  ink  (i.e.  othar  than  blua  or  black)/ 
Encra  da  coulaur  (i.a.  autra  qua  blaua  ou  noira) 


I     I   Colourad  piatas  and/or  iliuatrations/ 


Pianchas  at/ou  iliuatrations  0n  coulaur 


Bound  with  othar  material/ 
Rail*  avac  d'autraa  documents 


Tight  binding  may  cauaa  ahadows  or  tfiatortion 
along  interior  margin/ 

Lareiiure  aerrAe  paut  cauaer  da  I'ombra  ou  da  la 
diatortion  la  long  da  la  marge  IntMeure 

Blank  laavea  added  during  reatoration  may 
appear  within  the  text.  Whenever  poaaible,  theae 
have  been  omitted  from  filming/ 
II  ae  paut  que  certainea  pagea  bianchaa  ajouties 
lore  d'une  reatauration  apparaissant  dana  la  texte, 
mate,  ioraqua  cela  #«»it  poaaible.  cea  pagea  n'ont 
paa  «tA  filmAea. 

Additional  commenta:/ 
Commentaires  supplAmantairos; 


L'Inatitut  a  microf  ilm4  la  mallleur  exemplakre 
qu'il  lui  a  4t4  poaaible  de  ae  procurer.  Lea  dAtoiia 
da  cat  axemplaira  qui  aont  paut-Atra  uniquae  du 
point  da  vua  bibliographique,  qui  peuvant  modifter 
una  image  reproduite.  ou  qui  peuvent  exiger  une 
modification  dana  la  m4thoda  normale  de  filmaga 
aont  indiqute  ci-daaaoua. 


Tr 
to 


D 
D 

n 
0 
n 
0 
n 

D 
D 

n 


Coloured  pagea/ 
Pagea  da  couleur 

Pagea  damaged/ 
Pages  endommagtea 

Pagea  reatorad  and/or  laminated/ 
Pagea  reataurAea  at/ou  pellicuMea 

Pages  diacoiourad.  stained  or  foxed/ 
Pages  dAcoiorAes.  tachetAea  ou  piquiea 

Pagea  detached/ 
Pagea  dAtachAas 

Showthrough/ 
Tranaparance 

Quality  of  print  variea/ 
QualitA  InAgaia  de  rSmpreasion 

includes  supplementary  mateiial/ 
Comprend  du  material  auppMmantalra 

Only  edition  available/ 
Seule  Mition  diapociibia 

Pages  wholly  or  partially  obacurad  by  errata 
alips,  ttesuaa,  etc.,  Iwve  been  refllmed  to 
enaure  tha  beat  poaaible  image/ 
Lea  pagea  totaiament  ou  partiallement 
obacurciaa  par  un  feuillet  d'arrata,  una  palure, 
etc.,  ont  M  fiim^ea  A  nouveau  de  fapon  A 
olitanir  la  meilleure  image  poaaible. 


TMs  item  Is  filmed  at  the  reduction  ratio  checked  below/ 

Ce  document  eat  film*  au  taux  de  rMuctkMi  IndiquA  ci-daaaoua. 

leX  MX  1BX  22X 


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fin 
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c!3f 
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bai 
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2SX 


30X 


2i 


12X 


ItX 


UX 


2tX 


n 

ttx 


Tim  eopy  filmMl  h«r«  has  b««n  raproduead  ttMnks 
to  th«  gwMroaity  of: 

Univtraity  of  Alberta 
Edmonton 


L'oxomplairo  film4  fut  roproduit  grico  i  la 
gAfiAroait*  da: 

Univtnity  of  Albtrta 
Edmonton 


Tha  imtgaa  appaaring  hara  ara  tha  baat  quality 
poaalbia  eonaidaring  tha  oondldon  and  lagibiHty 
of  tlia  original  copy  and  in  kaaping  witli  tlia 
Aiming  eontraot  apaeiffleationa. 


Original  eoplaa  in  printad  papar  eovara  ara  fMmad 
b»jlnning  with  tha  front  covar  and  anding  on 
tha  laat  paga  with  a  printad  or  ilkiatratod  impraa- 
•ion.  or  tha  bacic  oovar  whan  appropriata.  All 
othar  original  copiaa  ara  fHmad  beginning  on  tha 
firat  paga  with  a  printad  or  Uiuatratad  impraa- 
•Ion.  and  anding  on  tha  laat  paga  with  a  printad 
or  Uiuatratad  impraaaion. 


Tha  laat  racordod  front*  on  aach  mie?afieho 
shall  oontain  tha  symbol  "^^  Imaaning  "CON- 
TINUED"), or  tho  s/mbol  ▼  (moaning  "END"), 
wMehavar  appliaa. 


Laa  imagas  suivantaa  ont  4tA  raproduitas  svac  la 
plus  grand  soin.  eompta  tanu  da  la  ecndltion  at 
da  la  nattat*  da  raxamplaira  film*,  at  an 
eonformitA  avfc  laa  conditions  du  contrat  da 
fllmaga. 

Laa  axampialraa  originaux  dont  la  couvartu'-a  an 
papiar  aat  ImprimAa  sont  filmte  it  eommancant 
par  la  pramiar  plat  at  an  tarminant  soit  par  la 
damlAra  paga  qui  oomporta  una  ampralnta 
d'imprassion  ou  d'iilustration.  xoit  par  I*  sacond 
plat,  salon  lo  oaa.  Tous  las  autras  axamplairas 
originaux  sont  filmda  wn  eoyirmanpant  par  la 
pramlAra  paga  qui  comporto  una  ampralnta 
d'impraaaion  ou  d'iHuatration  at  an  tarminant  par 
la  damlAra  paga  qui  comporto  una  taiia 
ampralnta. 

Un  daa  symbolaa  suivan*s  spparattra  sur  la 
damiir*  imaga  da  chaqua  microfiche,  salon  la 
eaa:  la  aymbola  — ^  signifia  "A  SUIVRE".  la 
symbola  ▼  signifia  "FIN". 


Mapa,  plataa,  charts,  ate.,  may  ba  filmad  at 
dJffarant  raduedon  ratioa.  Thoaa  too  larga  to  ba 
andraly  incivdad  in  ono  axpoaura  ara  filmad 
beginning  in  tha  uppar  laft  hand  eornar.  laft  to 
right  and  top  to  bottom,  aa  many  framaa  aa 
raquirad.  Tha  following  dlagrama  illuatrata  tha 


Laa  cartaa.  planchaa.  tablaaux.  ate.  pauvant  Atra 
filmte  A  daa  taux  da  rMuction  diffArants. 
Lorsqua  la  document  ast  trap  grand  pour  ttra 
raproduit  m%  un  saul  cliehA.  ii  ast  f iim*  k  partir 
da  I'angia  supMaur  gaucha.  dm  gaucha  i  droita. 
at  da  haut  m%  baa,  i%  pranant  la  nombra 
d'imagas  nteaasaira.  Las  diagrammas  suivants 
illuatrant  la  mAthodo. 


1 

2 

3 

1 

2 

3 

4 

5 

6 

^^m^ 


y^y^. 


Z^^:^  '^"tT'^^-^'  *-* 


/ 


THE    PROBLEM   OF    ECONOMIC 
EDUCATION 


BY 


SIMON  NEWCOMB 


Reprinted  from  the  Quarterly  Journal  of  Economics  for  July,  ,893 


BOSTON 

Geo.  H.  Ellis,  Printer,  141  Franklin  Street 

1893 


m 


A     V .  -3. 


THE  PROBLEM  OF  ECONOMIC  EDUCATION. 


Tjfe  fact  that  there  is  a  wide  divergence  between  many 
of  the  practical  conclusions  of  economic  science,  as  laid 
down  by  its  professional  exponents,  and  the  thought  of 
the  public  at  large,  as  reflected  in  current  discussion  and 
in  legislation,  is  one  with  which  all  are  familiar.  In  some 
of  its  aspc'ts  this  divergence  has  become  so  trite  a  subject 
that  it  might  seem  doubtful  whether  anything  new  and 
useful  could  now  be  said  about  it.  There  is,  however, 
one  aspect  of  the  case  well  worthy  the  consideration  of  all 
interested  in  educational  and  social  progress.  What  it  is 
will  be  made  clear  by  first  differentiating  it  from  another 
which  has  attracted  much  more  attention. 

The  current  view  of  the  questions  at  issue  between  the 
contending  parties  is  that  the  leading  economists  of  the 
past,  especially  those  of  England,  constructed  an  abstract 
science  which  rec?nt  experience  and  thought  have  shown 
to  be  inapplicable  to  the  actual  state  of  industrial  society. 
Tliese  writers  were  too  eager  to  make  their  conclusions 
the  sole  guiding  principles  in  economic  legislation,  ignor- 
ing the  diificulties  growing  out  of  the  complex  conditions 
of  the  social  organism  as  it  actually  existed.  Their  system 
has,  however,  been  taught  and  enforced  with  such  per- 
sistence that  the  result  is  a  general  rebellion  which  now 
threatens  to  overturn  the  whole  fabric  of  economic  sci- 
ence. From  this  point  of  view  the  divergence  is  between 
a  coherent  but  somewhat  antiquated  system  mostly  be- 
longing to  the  past  and  a  body  of  new  ideas  introduced 
by  a  younger  generation  of  thinkers. 

This  may  be  true  so  far  as  it  goes;  and,  were  it  the 
whole  truth,  there  would  be  nothing  abnormal  or  surpris- 
ing in  the  situation.    All  science,  properly  so  called,  is, 


from  the  nature  of  the  case,  more  or  less  abstract.  When- 
over  abstract  science  is  applied  to  human  affairs,  duo  ac- 
count must  be  taken  of  all  modifying  circumstances,  else 
we  shall  be  led  to  erroneous  conclusions.  Each  of  its 
doctrines  is  constantly  open  to  challenge,  holding  its  place 
only  on  the  same  terms  that  a  cliampion  holds  the  bolt : 
whenever  another  appears  powerful  enough  to  take  its 
place,  it  must  give  way.  Tlie  changes  in  the  industrial 
world  since  Ricardo,  we  might  almost  say  since  Mill,  liave 
been  so  revolutionary  that  it  would  be  wonderful  if  aj)- 
plied  economics  at  least  did  not  med  reconstruction. 
Economists  may  admit,  without  detracting  from  the  dig- 
nity or  the  value  of  their  science,  not  only  that  due  regard 
must  be  had  to  all  modifying  circumstances  in  applying 
its  abstract  principles,  but  that  economic  considerations 
cannot  be  the  sole  guide  of  the  legislator  in  matters  of 
public  policy.  So  far  as  the  battle  is  being  fought  on  the 
lines  thus  indicated,  it  is  an  intelligent  one  in  which  econ- 
omists of  opposing  views  are  themselves  the  leading  com- 
batants. Its  consideration  is  not,  however,  the  object  of 
the  present  paper. 

Tlie  divergence  to  which,  the  attention  both  of  econo- 
mists and  the  thinking  public  is  now  invited  runs  on  lines 
essentially  different  from  those  just  marked  out.  The 
disagreement  in  question  is  not  between  different  classes 
of  economic  students  or  different  schools  of  thought,  but 
between  well-established  economic  conclusions  on  the  one 
hand  and  the  ideas  of  the  public  on  the  otlier.  These 
ideas  do  not  spring  from  a  study  of  the  contrast  between 
the  present  state  of  industry  and  that  of  a  century  ago, 
but  aie  as  old  as  our  commercial  system.  Their  fault  is 
precisely  that  with  which  many  moderns  taunt  the  school 
of  Ricardo :  they  are  based  on  a  few  abstract  principles  or 
hasty  and  superficial  deductions  from  assumed  principles, 
with  little  regard  to  the  actual  facts  of  industry.  If  they 
were  consistent  enough  to  constitute  a  system,  that  system 


m 


might  be  ciillod  the  popular  political  oconomy.  VVIiiit  I 
first  propose  to  show  is  that  we  have  to  deal  with  ideas 
couturios  old,  on  which  the  thought  of  professional  ocouo- 
mists  has  never  made  any  permanent  impression  except, 
perhaps,  in  Great  Britain,  and  that  in  the  every-day  appli- 
cations of  purely  economic  theory  our  public  thought,  our 
legislation,  and  oven  our  popular  economic  nomenclature 
are  what  they  would  have  been  if  Smith,  Ricardo,  and 
Mill  had  never  lived,  and  if  such  a  term  as  political  econ- 
omy had  never  been  known. 

One  of  the  most  marked  points  of  antagonism  between 
the  ideas  of  the  economists  since  Adam  Smith  and  those 
which  governed  the  commercial  policy  f)f  nations  before 
his  time  is  found  in  the  case  of  foreign  trade.  Before 
such  a  thing  as  economic  science  was  known  arose  the 
theory  of  the  "  balance  of  trade."  The  fundamental  doc- 
trine of  this  theory  was  that  trade  was  advantageous  or 
disadvantageous  to  a  nation  according  as  the  value  of  its 
exports  exceeded  or  fell  short  of  the  value  of  its  imports. 
Accordingly,  in  the  nomenclature  of  the  time,  an  unfavor- 
able balance  of  trade  or  state  of  credit  meant  one  in  which 
the  imports  were  supposed  to  exceed  the  exports,  and  a 
favorable  balance  the  contrary.  An  immediate  corollary 
from  this  view  was  that  trade  between  two  nations  could 
not  be  advantageous  to  both,  because  the  values  which 
each  exported  to  the  other  could  not  both  be  greater  than 
those  received  from  the  other.     ♦ 

This  doctrine  was  denied  by  the  Physiocrats,  and  shown 
to  be  wholly  fallacious  by  Adam  Smith.  For  a  century 
and  a  half  the  doctrine  entertained  and  taught  by  econo- 
mists is  that  there  can  be  no  trade  between  two  nations 
which  is  not  advantageous  to  both ;  that  men  do  not  buy 
or  sell  unless  what  they  receive  is  to  them  more  valuable 
than  what  they  give  in  exchange ;  and  that  what  is  true 
of  the  individual  man  is,  in  this  respect,  true  of  the 
nation.    And  yet  the  combined  arguments  of  economists 


6 


for  a  hundred  years  have  not  sufliced  to  change  the 
noMUMichiture  or  modify  thu  ideas  of  conunorcial  nations 
upon  the  subject.  One  who  should  road  that  cha[)ter  of 
Smith's  work  in  wliich  lie  attempts  to  refute  tlic  ohl  doc- 
trine would  almost  suppose  tliat  lie  was  reading  a  discus- 
sion before  a  committee  of  Congress  at  the  present  time. 
The  only  points  in  whicli  the  arguments  refuted  by  Suiith 
dift'er  from  those  whiclt  we  liear  to-day  is  that  the  prin- 
ciples which  lie  enunciates  in  order  to  refute  them  are 
now  regarded  as  so  axiomatic  that  no  statement  of  them 
is  necessary.  We  accept  them  as  so  much  a  matter  of 
course  that  we  are  not  struck  even  by  tlieir  antagonism 
to  our  own  humane  sentiments.  Tliat  no  nation  is  so 
advanced  as  our  own  iii  treating  all  nations  and  peoples 
as  kindred  is  abundantly  shown  by  the  liberality  of  our 
contributions,  and  the  activity  of  our  authorities  when- 
ever distress  is  to  be  relieved  in  any  part  of  the  world. 
And  yet  witliin  a  year  the  distress  which  many  industri- 
ous workmen  in  England  and  elsewhere  wore  said  to  be 
suffering  in  consequence  of  our  legislation,  and  their  con- 
sequent execration  of  many  of  our  leading  statesmen,  not 
to  say  of  our  nation  at  large,  were  portrayed  everywhere 
among  us  in  glowing  colors,  not  to  make  us  recede  from 
our  position,  but  as  a  proof  that  our  policy  was  well  cal- 
culated to  promote  our  own  interests,  and  should  there- 
fore be  persisted  in.  It  has  been  assumed  as  an  axiom 
which  needs  no  proof,  because  none  would  be  so  hardy 
as  to  deny  it,  that  foreign  nations  cannot  honestly  be  in 
favor  of  any  trade  with  us  that  is  not  to  our  disadvantage ; 
that  the  very  fact  that  they  want  to  trade  witli  us  is  a 
good  reason  for  receiving  their  overtures  with  suspicion 
and  obstructing  their  wishes  by  restrictive  legislation.  Wc 
find  this  opinion  reflected  not  only  in  public  addresses  of 
statesmen,  but  in  documents  of  the  highest  official  dignity. 
It  may  be  replied  that  these  were  the  conclusions  of 
only  one  political  party,  and  not  of  the  majority.     Bub 


tliis  ground  will  sciircely  In^ar  exnminiition.  The  vinws 
in  (lUcHtinn  woro  not  cinlxMlied  in  tlio  itliitfoini  of  any 
party;  and  any  political  Icudor  who  hud  proclaimed  that 
we  wished  to  injure  the  industries  of  foreign  nations 
would  have  been  repudiated  by  both  parties.  'I'lie  fai't 
was  that  one  party  wanted  to  gain  votes,  and  sagacious 
leaders  believed  the  nation  to  bo  so  strongly  ind)ued  with 
tlu!  notion  that  the  distress  of  another  nation  meant  the 
gain  of  our  own  that  they  could  gain  votes  by  setting  it 
forth. 

It  must  be  Cftnfessed  that  this  contention  was  not  met 
by  the  oi)posite  party  in  the  way  that  would  have  been 
most  accei)table  to  economists.  Indeed,  we  fear  that,  had 
an  orator  for  the  other  side  been  instructed  to  teach  the 
people  that  the  alleged  distress  was  rather  a  proof  that  we 
also  suffer,  and  that  trade  would  be  as  advantageous  to 
us  as  to  those  we  traded  with,  he  would  have  been  a  little 
afraid  of  prejudicing  his  hearers  against  his  doctrine. 
Probably  he  would  have  thought  it  wiser  to  say  nothing 
on  the  subject,  or,  if  he  could  do  so  with  truth,  to  proclaim 
that  the  distress  painted  by  the  opposite  party  had  been 
greatly  exaggerated.  If  evidence  could  have  been  adduced 
to  show  that  the  tin  manufacturers  of  Wales  were  more 
l)rosperous  under  our  MoKinley  tariff  than  they  had  ever 
been  before,  <tne  cannot  but  suspect  that  the  Democratic 
orator  would  have  considered  that  fact  more  telling  against 
the  tariff  than  any  argument  based  on  the  opposite  alle- 
gation. 

It  can  hardly  be  claimed  that  the  apparent  change  in 
public  sentiment  within  the  last  two  or  three  years  is 
really  so  radical  tliat  the  doctrines  in  question  have  been 
wholly  rejected.  It  is  more  a  reaction  against  the  ex- 
cesses to  which  principles  in  themselves  popular  were 
carried  by  the  Fifty-first  Congress  than  a  permanent  revo- 
lution. Great  changes  in  2'iiblic  sentiment  do  not  occur 
suddenly,  and  economists  must  expect  many  years  of  hard 


t 


work  hefont  tlio  (lootriiics  wliiuli  they  ()[)|)()H(!  aro  wholly 
rcjoctod.  Ill  thJH  uoiiiifctioii  tho  iiiiultur<!(l  iiomuiuOuturu 
of  tlio  fiiihject  is  wortliy  of  attention.  This  teniis  *'  favor- 
able" anil  "nil favorable,"  as  applied  to  the  snpposuil 
balance  of  trade,  still  mean  what  they  did  before  Adinn 
Smith  was  born.  We  might  well  tremble  for  the  political 
fate  of  any  statttsman  who  should  publicly  maintain  that 
our  exports  would,  in  the  long  run,  substantially  balaneo 
our  imports,  no  matter  what  policy  we  adopted;  aiid  that, 
if  this  equality  could  be  disturbed,  the  advantage  would  be 
on  the  side  of  the  nation  which  imimrtcd  the  greater  values. 
The  divergence  between  tlie  economist  and  the  public 
is  by  no  means  confined  to  foreign  trade.  We  find  a 
direct  antagonism  between  them  on  nearly  every  ques- 
tion involving  the  emj)loyment  of  labor  and  the  relation 
of  industry  to  the  welfare  of  the  community.  The  idea 
that  the  utility  and  importance  of  an  industry  are  to  be 
measured  by  the  employment  which  't  gives  to  labor  is 
so  deeply  rooted  in  human  nature  that  economists  can 
scarcely  claim  to  have  taken  the  first  step  towards  its 
eradication.  From  tlie  economic  point  of  view,  the  value 
of  an  industry  is  measured  by  the  utility  and  cheapness 
of  its  procUict.  From  the  popular  point  of  view,  utility 
is  nearly  lost  sight  of,  and  cheapness  is  ai»t  to  be  con- 
sidered as  much  an  evil  on  one  side  as  it  is  a  good  on  the 
other.  The  benefit  is  supposed  to  be  measured  by  the 
number  of  laborers  and  the  sum  total  of  wages  which 
can  be  gained  by  pursuing  the  industry.  We  see  this 
in  the  importance  constantly  attached  by  our  legislators 
to  the  establishment  of  new  industries  and  the  employ- 
ment of  men  in  them.  Here  legislation  only  reflects 
the  sentiment  of  a  large  maj(»rity  of  the  active  business 
community.  A  man's  economic  usefulness  to  s(tciety  is 
supposed  to  be  measured  by  his  expenditure  of  money 
and  consumption  of  goods.  He  who  spends  freely  is 
pointed  out  as  a  benefactor;  while  the  miser,  who  invests 


w 


his  iti(M)iii(!,  is  Inokiid  upon  a.s  ii  huKImIi  being,  iiiiiulfiil  only 
(»f  liiH  own  u^ri^M-un(li'/.unient. 

A  I'uw  yciu'H  :'.gu,  (liirin;^  tliu  ('onj^M'osHioiial  (luhiiU;  npoii 
till!  proposiMl  tax  on  iirtiruiul  hnttur,  it  was  «;|tuii  uil  on 
niiu  ttidit  tliut,  if  till!  fi'eu  nianufa(;tiiru  of  tliiH  ai-tiulu  wito 
iH'i'niitted,  tlioio  was  every  prosiiei-t  tliat  witiiin  a  few 
yciii's  linttoi-  wottlil  uost  only  ten  (uMits  ti  ponnil.  One 
acceptinj^  tlio  views  of  tlio  eeononiists  wonUl  naturally 
Hiippose  that  tliiti  claim  was  made  by  an  opponent  of  tlio 
bill,  wIh)  desired  to  portray  tlio  good  efl'ects  of  free  com- 
petition in  the  manufactiu'e.  Really,  liowovcr,  it  was  put 
forth  as  an  argument  against  iiermittiiig  the  manufacture. 
The  most  curious  feature  of  the  debate,  and  the  one 
which  has  led  mu  to  cite  it  in  this  connection,  is  that 
tliero  seems  to  have  been  no  one  [irosent  liold  enough 
to  join  issue  on  the  concUuioii,  and  to  claim  that,  if 
there  was  a  [irospect  that  the  community  at  large  would 
soon  be  able  to  obtain  butter  at  ten  cents  a  pound,  it  would 
be  a  good  thing  for  us  all.  And  yet  there  is  no  propo- 
sition on  which  we  find  a  more  general  agreement  among 
those  who  professionally  study  the  subject  than  that  mod- 
ern economic  progress  consists  very  largely  in  cheapening 
processes,  and  that  whatever  evil  may  arise  from  cheap- 
ened production  is  only  a  transient  one,  which  is  compen- 
sated many-fold  by  placing  an  increased  supply  of  the 
necessaries  of  life  within  reach  of  the  masses. 

Another  excellent  test  case  was  afforded  by  ♦^he  much- 
condemned  proviso  on  which  we  accepted  international 
copyright.  The  requirement  that  no  book  should  enjoy 
the  benefit  of  the  law  unless  it  was  printed  from  typo 
set  within  the  United  States  was  founded  on  a  belief 
that  American  industry  was  thus  benefited.  Yet,  if  the 
principles  of  economics  are  well  founded,  no  benctit  re- 
sulted to  society  at  large  within  the  United  States,  since 
the  only  ultimate  eflect  would  be  to  cause  people  to  leave 
other  employments  in  order  to  engage  in  printing. 


10 


I  1 


t    ! 
I    . 


Another  striking  example  is  afforded  by  the  popular 
feeling  against  the  employment  of  convict  labor.  From 
the  poii't  of  view  of  the  economist,  no  policy  can  bo 
more  rational,  and  no  princ'ple  more  obvious,  than  that 
the  powers  and  faculties  of  the  criminal  classes  should, 
during  a  term  of  imprisonment,  l>e  made  as  useful  as 
possible  to  the  comni'iaity,  and  that  tliese  classes  should 
be  trained  into  habits  of  regularity  and  industry.  And 
yet  laws  have  been  passed  in  the  State  of  New  York, 
and  seem  to  have  a  good  proijpcct  of  passage  in  many 
other  States,  prohibiting  the  employment  of  convicts  in 
making  articles  useful  to  the  public.  Moreover,  this 
movement  deixves  all  its  vitality  from  the  puiely  eco- 
nomic consideration  that  the  goods  manufactured  by  these 
convicts  are  sold  in  competition  with  things  manufact- 
ured by  honest  producers. 

The  inconsistency  of  this  policy  with  the  theory  of 
socialism  is  very  instructive.  If  in  a  Shaker  commu- 
nity it  were  proposed  that  offenders  should  be  supported 
at  the  public  expenL"",  and  not  allowed  to  perform  any 
labor  in  return,  the  sanity  of  the  mover  of  the  proposal 
would  be  gravely  doubted.  Yet  such  is  the  influence  of 
the  commercial  system  upon  our  ways  of  thinking  that 
an  equivalent  measure,  tfiken  by  society  at  large,  is  ear- 
nestly supported  by  the  very  class  that  is  most  injured  by 
it.  The  goods  manufactured  by  convicts  are  for  the  most 
part  just  those  of  which  the  poor  labc»rer  stands  most  in 
need ;  and,  if  the  management  of  our  prisons  were  con- 
ducted on  philanthropic  principles,  convicts  could  advan- 
tageously be  employed  in  making  shoes  and  coarse  cloth- 
ing for  free  distribution,  or  sale  at  a  nominal  price,  to  the 
poorest  classes.  Yet  such  a  measure  has  never  been  seri- 
ously proposed.  It  may,  indeed,  be  feared  that  a  mover 
of  this  proposal  would  be  received  in  labor  circles  much 
as  the  mover  of  the  opposite  one  would  have  been  in  the 
Shaker  community. 


11 


Tho  wide  prevalence  of  usury  laws  among  us  affoj'ds 
another  example  of  tlie  persistence  of  the  ideas  of  a 
former  age  long  after  they  have  been  shown  fallacious, 
not  only  by  thoughtful  investigation,  but  by  general  busi- 
ness experience.  It  is  not  necessary  that  we  should  con- 
demn every  attempt  to  regulate  the  rate  of  interest,  any 
more  than  to  regulate  other  contracts  in  exceptional 
cases.  The  point  to  which  we  ask  attention  is  the  gen- 
eral belief  throughout  the  community  that  the  rate  of  in- 
terest can  practically  be  regulated  by  law.  Not  dissimilar 
from  I'ns  is  the  wide  general  belief  that  laws  making  it 
difficult  to  collect  rents  and  enforce  tiie  payment  of  debts 
are  for  the  benefit  of  the  poorer  classes.  They  are  un- 
doubtedly for  the  benefit  of  those  classes  who  do  not  ex- 
pect to  pay.  But  the  fact,  so  obvious  to  the  business 
economist,  that  everything  gained  in  this  way  comes  out 
of  the  pockets  of  the  poor,  who  are  going  to  pay  in  the 
form  of  insurance,  is  something  which  the  law-making 
public  have  not  yet  apprehended. 

The  spirit  in  which  economic  doctrines  are  often  re- 
ceived is  also  worthy  of  consideration.  A  single  in- 
stance of  this  spirit  will  suffice.  Probably  no  phrase  ever 
used  by  Carlyle  has  met  with  wider  currency  than  the 
epithet  "dismal  science"  which  he  applied  to  political 
economy.  And  yet  a  little  consider.ation  will  show  that 
political  economy  is  dismal  only  in  the  sense  that  every 
conclusion  as  to  what  man  cannot  do  may  be  called  dismal. 
A  stormy  voyage  across  the  Atlantic  is  very  dismal ;  but 
no  one  froiii  that  premise  ever  drew  the  conclusion  that 
boys  ought  not  to  learn  anything  about  the  Atlantic  Ocean, 
or  censured  the  raeteorologist  who  tells  us  that  the  ocean 
is  rough  in  winter,  and  will  make  the  Isnidsman  seasick. 
That  you  cannot  eat  your  cake  and  have  it,  too,  is  a 
maxim  taught  the  school-boy  from  earliest  infancy.  But, 
when  the  economist  applies  the  same  maxim  to  the  nation, 
he  is  met  with  objections  and  arguments,  not  only  on  the 


12 


part  of  the  thoughtless  masses,  but  of  influential  and  intel- 
ligent men. 

An  apology  may  seem  requisite  for  devoting  attention 
to  a  phrase  so  puerile.  Certainly,  there  is  no  other 
branch  of  human  thought  in  which  such  an  epithet  would 
be  considered  worthy  of  consideration.  I  allude  to  it 
because  the  satisfaction  with  which  it  is  received,  the 
unction  with  which  it  is  quoted  by  those  opposed  to  the 
conclusions  of  the  economists,  and  vhe  wide  currency  given 
',. )  it,  show  that  it  has  been  received  as  a  valid  reason  why 
the  conclusions  of  economists  should  be  ignored. 


Before  we  can  reach  a  final  judgment  on  this  conflict  of 
doctrine  there  are  several  points  to  be  examined.  The 
first  question  which  may  arise  is  whether,  after  all,  the 
actual  divergence  of  views  may  not  be  less  than  it  appeara, 
and  may  not  arise  from  a  consciousness  on  the  part  of  the 
public  that  economic  considerations  should  not  alone 
direct  our  public  policy. 

It  must  be  admitted  that  economists  have  not  always 
remembered  that  the  statesman  must  take  into  account 
considerations  of  political  expediency,  education,  develop- 
ment, and  even  sentiment,  as  well  as  economic  ones. 
Diversification  of  industries,  independence  of  foreign  na- 
tions, and  the  education  of  the  people  in  the  mechanic 
arts  are  all  legitimate  objects  to  be  taken  account  of  in 
regulating  foreign  trade.  Even  a  pleasure  so  purely  sen- 
timental as  that  supposed  to  arise  from  the  possession  of 
metallic  wealth  drawn  wholly  from  American  mines  need 
not  be  wholly  despised,  were  it  really  felt  by  the  masses. 
Economists  who  are  said  to  have  opposed  the  laws  regu- 
lating child's  labor  in  factories  were  perhaps  right  from  a 
merely  economic  standpoint;  yet  a  higher  order  of  con- 
siderations, looking  to  the  development  of  the  rising  gen- 
eration, justly  turned  the  scale. 

But  an  examination  of  public  utterances  on  the  tariff 


13 


show  conclusively  that  these  are  not  the  controlling 
factors  which  have  led  the  public  to  favor  what  we  call 
the  system  of  protection.  If  the  farmers  and  the  public 
were  told  that  many  of  the  necessaries  of  life  actually  cost 
them  more  in  consequence  of  the  tariff,  but  that  this  is 
only  the  price  they  pay  for  the  benefits  of  a  wider  diversi- 
fication of  industries,  and  a  general  diffusion  of  skill  in 
the  mechanic  arts,  they  would  soon  rebel.  The  real 
poj)ular  strength  of  the  system  is  founded'on  purely  eco- 
nomic considerations, —  on  the  doctrine  that  foreign  com- 
petition is  injurious  to  American  industry ;  that  more  em- 
ployment is  given  to  every  class  of  American  producers 
when  they  are  compelled  to  produce  anything  at  home  in- 
stead of  allowing  foreigners  to  make  it  for  us ;  and  that 
a  real  danger  may  exist  of  our  economic  condition  being 
impaired  by  the  excessive  import  of  foreign  goods,  to 
which  we  might  be  tempted  under  a  rSgime  of  free  trade. 
These  doctrines  are  not  peculiar  to  our  time  c  country : 
they  are  a  part  of  the  heritage  of  the  race,  which  a'century 
of  teaching  has  not  sufficed  to  eradicate. 

The  unique  character  of  this  state  of  things  is  still 
further  emphasized  when  we  inquire  whether  there  is  not 
an  evident  prospect  that  with  the  advance  of  intelligence 
the  views  of  the  economists  will  meet  with  a  better  recep- 
tion. It  seems  to  the  writer  that  during  the  last  thirty 
years  the  prospects  of  this  reception  have  distinctly  retro- 
graded, even  after  making  due  allowance  for  the  recent 
reaction  in  our  own  country.  Not  for  fifty  years  has  the 
idea  that  every  nation  does  well  for  itself  in  restricting 
foreign  trade  been  so  strongly  upheld  as  it  is  to-day. 
Garfield  could  scarcely  say  now  what  he  said  in  Congress 
twenty  years  ago,  that  the  intelligence  of  the  world  was 
on  the  side  of  free  trade.  At  no  epoch  in  our  history  has 
the  idea  of  preventing  competition  with  organized  labor 
been  so  strong  as  it  is  among  us  now.  It  is  not  even  true 
that  the  line  of  division  can  be  drawn  by  education.     It 


14 


cannot  bo  said  that  even  that  small  percnntage  of  the  male 
population  who  have  received  a  college  education  is  largely 
on  the  side  of  the  economists;  but  it  is  said,  I  do  not 
know  whether  with  good  foundation,  that  the  majority  of 
students  who  have  been  trained  in  economic  theories 
reject  those  theories  when  they  enter  the  active  business 
of  life. 

Of  the  nature  of  the  situation  as  we  have  depicted  it 
there  can,  we  conceive,  be  no  doubt.  Admitting  that  pro- 
fessed economists  have  in  several  instances  erred  in  the 
applications  of  theii*  doctrine,  either  through  not  making 
sufficient  allowance  for  its  modification  by  circumstances 
or  through  applying  it  to  questions  not  purely  economic, 
the  fact  remains  that  the  practical  maxims  which  their  sci- 
ence inculcates  are  unheeded  by  the  great  mass  of  the 
public,  and  have  little  or  no  influence  in  guiding  legisla- 
tion. It  must  also  be  conceded  that  we  see  in  recent 
times  a  growing  disposition  among  economists  to  abandon 
this  particular  field  of  conflict,  with  the  expressed  or  im- 
plied admission  that,  after  all,  the  wisdom  of  the  public 
and  th*)  common  sense  of  the  masses  may  be  a  better  guide 
than  the  theories  of  students  and  philosophers. 

It  would  be  quite  foreign  to  our  present  purpose  to 
argue  the  question  which  side  of  the  controversy  is  in  the 
right,  or  to  repeat  the  reasonings  by  which  economists  reach 
their  conclusions.  Yet  there  are  certain  positions  taken 
by  those  who  are  more  or  less  inclined  to  abandon  the 
field,  or  who  conceive  economists  to  be  in  the  wrong,  which 
should  by  no  means  be  ignored.  The  proposition  that  the 
common  sense  of  the  masses  is  better  than  the  wisdom  of 
the  learned  is  one  that  should  not  be  either  wholly  ac- 
cepted or  wholly  rejected.  The  fact  is  that  there  are  some 
cases  in  which  the  proposition  is  true,  and  others  in  which 
it  is  not  true.  Perhaps  we  may  make  a  contribution  to  the 
discussion  by  seeking  to  define  certain  cases  in  which  it  may 
be  true,  and  contrasting  them  with  others  in  which  it  is 


16 


undoubtedly  false.  The  political  history  of  the  nineteenth 
century  seems  to  show  that  public  opinion,  founded  on  the 
natural  instincts  and  tendencies  of  men  at  large,  has  guided 
the  great  political  and  social  movements  which  have  made 
our  age  what  it  is.  The  success  which  has  hitherto  been 
won  by  liberal  institutions  may  suffice  to  prove  the  suffi- 
ciency of  this  guide  in  the  great  field  of  public  policy. 
At  first  dight,  all  the  questions  at  issue  between  the  econo- 
mists and  the  public  appear  to  pertain  to  public  policy. 
Reasoning  in  a  broad  way  from  the  analogy  of  the  case, 
the  conclusion  might  seem  quite  natural  that  we  have 
here  a  contest  in  which  the  public  must  win,  because 
there  is  no  other  criterion  of  soundness  than  success  in 
sha[)ing  public  thought  and  guiding  the  course  of  events, 
and  that  the  economist  would  therefore  do  better  to 
abandon  the  field.  But  before  accepting  this  conclusion 
we  must  point  out  another  class  of  questions,  in  which 
public  opinion  and  the  instincts  of  the  masses  have  proved 
so  insufficient  that  progress  has  been  possible  only  by  com- 
pletely ignoring  them.  These  questions  include  all  that 
can  in  any  way  be  called  scientific.  The  question  has  fre- 
quently been  asked,  and  discussed  with  all  the  resources 
of  learning,  why  the  ancients  made  no  advances  in  physical 
science,  and  why  it  was  left  to  the  moderns  to  learn  such 
elementary  facts  as  the  expp.nsive  power  of  steam  and  the 
laws  of  force  and  motion,  and  to  apply  these  facts  to  the 
daily  needs  of  life.  The  really  difficult  question  might  be 
stated  as  the  converse  of  this.  We  should  rather  ask,  Why 
is  it  that  we  moderns  have  been  able  to  study  and  apply 
the  expansive  power  of  steam  and  to  formulate  the  laws 
of  force  and  motion,  when  the  history  of  the  whole  human 
race  would  seem  to  show  its  incapacity  for  such  achieve- 
ments ?  Only  those  who  make  a  special  study  of  the  sub- 
ject have  any  conception  of  how  unnatural  and  how  foreign 
to  all  ordinary  modes  of  thought  were  the  mental  proc- 
esses by  which  these  discoveries  were  made.    For  thou- 


16 


sands  of  years  mankind  universally  accepted  the  opinion 
that  every  object  in  motion  had  an  inherent  tendency  to 
come  speedily  to  a  state  of  rest.  The  experiments  and 
reasonings  which  would  have  shown  the  falsity  of  this  law 
were  within  the  power  of  every  one  to  make :  no  expensive 
apparatus  was  needed ;  nothing  but  a  little  study  of  the 
phenomena  going  on  around  us,  and  a  few  experiments 
suggested  by  this  study.  And  yet,  up  to  three  or  four 
centuries  ago,  no  one  ever  thought  of  making  the  experi- 
ments and  observations  necessary  to  decide  the  question; 
and  we  might  almost  say  that  after  the  truth  was  estab- 
lished more  than  a  century  was  required  to  make  it  evident 
even  to  the  learned. 

Coming  to  our  own  times,  we  may  take,  as  an  instance 
out  of  hundreds,  those  developments  of  electrical  and 
mechanical  science  which  have  made  the  steamship,  the 
railway  and  the  telegraph  what  they  are.  To  these  devel- 
opments public  opinion  and  the  instincts  of  the  masses 
have  contributed  absolutely  nothing.  As  guides  or  judges, 
they  would  have  been  worthless  until  the  results  were 
reached.  Any  one  who  should  have  proposed  to  submit  the 
question  of  the  double  expansion  of  steam,  or  that  of  quad- 
ruplex  telegraphy,  to  a  popular  vote,  in  order  that  the 
common  sense  of  the  masses  might  be  brought  to  bear  on 
the  subject,  would  have  been  classed  as  a  wag. 

Prom  the  point  of  view  which  we  are  now  taking,  the 
whole  question  must  turn  on  the  category  to  which  we 
shall  assign  the  mattera  at  issue  between  the  economist 
and  the  public.  That  these  matters  belong  rather  to 
the  scientific  than  the  political  class  ought  to  be  quite  clear 
to  all  who  fully  comprehend  them.  True,  they  are  in  a 
certain  sense  political,  in  that  they  involve  questions  of 
public  policy ;  yet  they  are  essentially  scientific  in  their 
nature.  The  scientific  character  of  all  the  questions  in- 
volved in  constructing  and  operating  gas-works  to  supply  a 
city  would  not  be  altered  by  the  fact  that  the  works  were 


17 


to  be  operated  by  a  municipality.  Public  opinion  is  no 
better  qualified  to  pass  upon  the  questions  growing  out  of 
the  relations  between  imports  and  exports  than  it  is  to 
decide  upon  the  best  form  of  locomotive.  The  question 
whether  restrictions  upon  the  freedom  of  labor  operate 
favorably  or  adversely  to  the  general  welfare  cannot  pi>s- 
sibly  be  decided  except  by  those  who  possess  the  faculty 
of  analyzing  the  effects  of  such  a  policy.  We  may,  from 
a  philosophic  point  of  view,  consider  all  the  measures  taken 
by  labor  unions  as  a  part  of  the  movement  of  the  age ;  but 
the  ultimate  effects  of  those  movements  ujion  the  produc- 
tion and  distribution  of  wealth  can  be  determined  only  by 
trained  thinkers.  The  vague  impressions  entertained  by 
the  public  as  to  the  effects  of  options  and  corners  on 
the  prices  of  the  necessaries  of  life  are  more  akin  to  the 
mediajval  theories  of  witchcraft  than  they  are  to  any  of 
the  ideas  on  which  the  successful  movements  of  our  own 
times  are  based. 

In  all  the  points  of  ant<agonism  thus  far  discussed  I 
have  endeavored  carefully  to  confine  myself  to  those  es- 
sentially scientific  in  their  nature.  Touching  these  we 
must  concede  that,  judging  from  the  analogies  of  history, 
the  economists  of  the  past  and  present  are  more  likely  to 
be  right  than  the  public.  But  there  it,  yet  another  point 
of  view  from  which  the  subject  may  be  considered.  If 
the  arguments  of  the  public  are  partly  founded  on  facts 
and  considerations  to  which  the  economists  do  not  give 
due  attention,  we  should  here  have  a  strong  point  in 
favor  of  the  former.  But  a  careful  study  of  the  subject 
shows  that  this  is  not  the  case.  The  conclusions  of  the 
public  are  based  on  a  superficial  view  of  the  subject,  which 
may  be  true  so  far  as  it  goes,  and  yet  leads  to  no  conclu- 
sive result.  Being  sujjerficial,  the  economist  sees  in  it 
everything  that  the  public  sees.  He  reaches  a  different 
conclusion  from  the  public  because  he  sees  farther  than 
the  public  does.     He  fully  understands  and  weighs  all  the 


18 


reasonings  and  arjjuments  of  the  laborer  who  fears  compe- 
tition, and  yet  assures  this  laborer  that  the  evil  of  competi- 
tion is  only  temporary,  to  be  replaced,  so  far  as  it  exists, 
by  a  greater  good  to  the  claas  which  he  represents. 

Before  entering  upon  the  consideration  of  the  causes 
and  the  remedy  of  this  abnormal  state  of  things,  there  are 
certain  misapprehensions  to  be  guarded  against.  One  of 
these  is  that  we  have  to  deal  with  a  movement  which  may 
be  described  as  a  rebellion  of  the  people  against  certain 
doctrines  preached  by  the  older  school  of  economists. 
The  latter  are  supposed  to  have  offended  the  practical 
good  sense  of  the  public  by  preaching  certain  abstract 
doctrines,  —  laissez-faire,  for  example.  They  have  carried 
this  doctrine  so  far  that  they  have  only  themselves  to 
blame  if  the  popular  uprising  against  it  endangers  the 
whole  of  economic  science.  It  is  also  supposed  that  the 
abstract  character  of  the  reasonings  used  by  them  has 
helped  in  this  rebellion. 

It  does  not  seem  to  the  writer  that  this  view  will  stand 
examination.  A  comparison  of  the  legislation  of  our 
country  with  that  of  others  Avill  show  that  no  pcoi)le  are 
more  wedded  to  laissez-faire  than  our  own.  Among 
no  other  people  is  the  habit  of  depending  upon  private 
initiative  in  great  public  works  so  strong.  No  people 
are  less  given  than  are  our  own  to  guarding  against 
corporate  abuses  by  intelligent  and  carefully  considered 
legislation.  One  illustrative  example  should  suffice  to 
make  good  this  clcim.  It  is  now  nearly  twenty-five  years 
since  Great  Britain,  in  whose  soil  laissez-faire  is  supposed 
to  have  taken  deepest  root,  followed  the  lead  of  most  other 
nations  in  nationalizing  the  telegraph.  In  adopting  the 
same  policy,  we  should  not  only  be  taking  a  measure  sug- 
gested by  the  good  sense  of  nearly  all  Christendom,  but 
one  demanded  by  our  own  interests.  We  have  to-day 
the  dejvrest  and  the  worst  telegraph  service  of  any  en- 
lightened nation  which  has  a  well-organized  public  ser- 


19 


vice.  In  England,  France,  Germany,  or  Switzerland  a 
deapatch  can  be  8ent  for  about  half  tliu  price  and  with 
much  greater  expedition  than  in  this  country.  With  all 
the  improvements  in  duplex  and  quadruplex  telegraphy, 
and  all  the  advantages  gained  by  increased  density  of  popu- 
lation and  increased  use  of  the  telegraph,  it  costs  almost  as 
much  to  send  a  despatch  i;  w  aa  it  did  twenty-five  years 
ago.  We  have  paid,  in  the  high  cost  of  our  service,  for 
all  the  scandals  which  the  manipulation  of  telegraph 
stocks  has  produced  in  the  money  market.  Yet  there  is 
not  the  slightest  prospect  of  even  a  strong  movement 
towards  the  natioiuiHzation  of  the  telegraph.  Should  it  be 
claimed  that  the  state  of  public  feeling  thus  indicated  is 
the  work  of  the  economists,  it  must  be  admitted  that  they 
have.  In  this  direction,  been  remarkably  successful  in  im- 
planting their  ideas  in  the  public  mind.  But  it  is  not 
claimed  that  the  [)olicy  in  question  has  grown  out  of  any 
well-founded  and  abstract  belief  in  laissez-faire.  The  real 
cause  it  is  not  necessary  to  discuss  in  the  present  con- 
nection. It  is  here  alluded  to  oidy  to  refute  the  claim 
that  the  unsatisfactory  relations  between  the  economists 
and  the  public  are  very  largely  due  to  the  preaching  of 
laissez-faire  by  the  former. 

A  careful  examination  of  the  case  will  also,  we  con- 
ceive, show  that  the  use  of  abstract  reasoning,  to  the 
exclusion  of  n  due  consideration  of  facts,  is  a  vice  in 
which  the  public  far  outdo  any  school  of  economists  that 
ever  existed.  This  vice,  if  vice  it  be,  is  a  much  more  pop- 
ular one  than  is  commonly  supposed.  To  show  how  far 
the  consequences  of  this  form  of  reasoning  are  made  to 
outweigh  practical  facts,  we  have  only  to  cite  the  system 
of  taxing  personal  property,  which  is  still  nlmost  universal 
among  us.  The  idea  on  which  it  is  founded  is  natural 
and  simple :  every  man  should  contribute  to  the  support 
of  the  government  in  the  proportion  of  his  accumulated 
possessions.    In  the  face  of  this  abstract  statement,  the 


20 


iioloriotis  fact  that  Iio  does  not  mo  uoiiUibiitu,  Unit  evury 
eflbrt  to  inuko  Iiiin  do  so  has  failed,  and  that  from  thu 
very  nature  of  things  1ie  eannot  be  made  to  do  it,  cuunts 
for  nothing.  Our  State  legislutorb  rarely  make  even  an  in- 
telligent effort  to  iiKiuire  into  or  cure  the  evil.  They  are 
satislied  with  legislating  in  aceordanue  with  the  abstract 
prinei[)le,  leaving  the  facts  to  take  care  of  themselves. 

It  must  also  be  renieml>ered  that  the  rebellion  against 
the  older  system  of  political  economy,  especially  that  of 
liicardo,  is  not  the  outcome  of  any  popular  movement 
whatever,  but  is  wholly  the  work  of  a  younger  school  of 
economists.  Its  lirst  advocates  were  found  in  the  uni- 
versities, and  not  among  the  people.  I  freely  admit  that 
this  is  not  true  of  the  labor  movement,  and  that  in  this 
movement  we  have  what  may  be  called  a  rebellion  against 
the  older  economic  principles,  which  did  not  come  from 
universities  or  economists,  but  from  the  masses.  But,  in 
so  far  as  this  movement  is  directed  against  the  principles 
of  the  older  political  economy,  there  is,  as  we  have  already 
shown,  nothing  modern  in  it.  So  far  as  principles  are 
concerned,  it  is  simply  a  new  outburst  of  ideas  which  are 
centuries  old.  In  so  far  as  the  later  economic  movement 
has  been  opposed  to  the  school  of  Kicardo,  there  is  of 
course  a  certain  sympathy  between  it  and  the  labor  move- 
ment ;  but  this  sympathy  does  not  result  in  any  wide 
interest  among  the  laboring  chisses  in  economic  principles, 
new  or  old. 

But  there  is  one  feature  of  the  case  as  I  have  described 
it  which  may  seem  discouraging,  and  the  cause  of  which  is 
worth  inquiring  into.  I  refer  to  the  fact  that  the  popular 
political  economy  seems  to  have  taken  a  greater  hold  on 
the  public  mind,  in  opposition  to  the  views  of  the  profes- 
sional economists,  during  our  time,  than  it  ever  did  before. 
Perhaps  this  circumstance,  more  than  any  other,  might 
make  us  doubt  whether  the  principles  which  we  advocate 
are  not  farther  than  ever  from  general  acceptance.     Para- 


81 


(loxicnl  tlioii<,'li  it  may  seem,  it  can,  wo  conceive,  be  shown 
that  tlio  reaction  in  question  is  due  to  the  diifuBion  of 
popuhir  education.  A  certain  amount  of  education  and 
knowledge  of  tlic  world  is  necessary  to  the  reception  even 
of  those  principles  which  I  have  collectively  described 
under  the  term  *' the  popular  political  economy."  When 
this  stage  is  attained,  they  are  as  natural  as  the  belief 
in  witchcraft  is  at  a  certain  stage  of  the  evolution  of 
thoJight.  Education  by  newspaper  is  eminently  adapted 
to  their  promotion.  The  press  has  diffused  such  a  <legreo 
of  intelligence  among  the  masses  that  hundreds  have  now 
a  wide  knowledge  of  the  world  where  one  had  it  a  few 
generations  ago.  But  the  press  has  done  nothing  to  i)ro- 
mote  careful  analysis,  continuous  thought,  or  the  study  of 
facts.  By  these  alone,  and  not  through  mere  intelligence, 
can  fallacies  be  made  evident.  Thus  increased  intelli- 
gence and  knowledge  of  the  world  have  only  served  to 
lay  a  wider  base  for  crude  thinking  and  fallacious  conclu- 
sions. Tn  the  fact  that  the  masses  have  been  educated  to 
a  certain  point  whei-e  a  system  looks  plausible,  but  not  to 
a  point  where  they  can  see  its  fallacy,  we  have  the  key 
to  the  whole  situation,  and  an  indication  of  the  only 
renvjdy. 

What  makes  this  state  of  things  especially  deplorable 
is  that  public  opinion,  acting  through  the  agencies  of 
government,  is  playing  a  part  in  our  economic  activity 
of  which  the  importance  is  con8e(piently  increasing.  It 
is  every  year  becoming  more  necessary  that  legislation 
should  be  guided  by  correct  conceptions  of  the  ultimate 
consequences  of  all  proposed  measures  upon  the  welfare 
of  the  community.  The  intelligent  socialist  might  well 
deplore  the  fact  that,  when  such  great  improvements  in 
our  industrial  education  and  activity  through  State  agency 
are  ideally  possible,  the  one  great  requisite  of  thorough 
understanding  of  the  forces  brought  into  play  when  such 
improvements  are    attempted    should    be   wanting.     He 


00 


hIi<>ii1<1  lint  fail  to  hou  tliiit  tlu>  tirHt  ootulitioii  towiirtlH  an 
eiilargtMiient  of  the  uuoiioniiu  fiinctioiiH  of  the  State  in  tlie 
acceptance  by  th(^  State  of  those  laww  wliich  govern  tlie 
production  and  dlHtrilnition  of  wealth,  aH  they  have  been 
developed  by  the  econoniic  invnBtigatoi-H  of  the  i)aHt  and 
prcHent. 

It  Ih  frequently  held  that  popular  goveniniont,  vn[)e- 
cially  when  based  on  universal  Huft'rage,  necessarily  re- 
flects the  ideas  of  the  inaHsea  rather  than  those  of  the 
thinlfing  and  educated  classes.  Were  this  the  (iase,  our 
study  could  scarcely  lead  us  to  any  practically  useful 
result.  But  wo  should  not  accept  this  conclusion  with- 
out testing  it  by  other  cases  than  those  now  biifore  us. 
The  abnormal  character  of  the  divergence  between  public 
opinion  and  economic  doctrine  will  be  made  clear  when 
wo  contrast  it  with  the  reception  by  the  public  of  the  re- 
sults of  thought  in  other  fields.  When  the  chemist  learns 
the  properties  of  new  compounds,  when  the  pathologist 
discovers  that  certain  agents  exercise  an  injurious  influ- 
ence upon  the  human  system,  when  the  entomologist  finds 
how  noxious  insects  may  be  destroyed,  they  have  no  dilVi- 
culty  in  persuading  the  public  of  the  correctness  of  their 
conclusions.  When  the  astronomer  mai>s  out  the  path  of 
an  eclipse  over  the  earth's  surface  a  hundred  years  before 
its  occurrence,  all  his  intelligent  fellow-citizens  believe 
implicitly  that  posterity  will  see  the  eclipse  exactly  as  bo 
has  predicted  it.  The  general  rule  has  been  that  the 
thinking  few  impress  their  ideas  ui)on  the  masses,  and 
thus  guide  the  policy  of  the  community,  even  when  there 
is  a  direct  antagonism  between  their  ideas  and  those 
which  the  masses  would  naturally  be  led  to  adopt.  To 
the  natural  man  no  doctrines  could  appear  more  repug- 
nant to  reason  and  experience  than  those  of  the  earth's 
rotundity  and  of  its  diurnal  rotation  on  its  axis.  Yet  the 
former  was  never  contested  by  any  one  who  had  occasion 
to  apply  it ;  and  the  latter  is  now  universally  accepted,  not 


1 


hocnuBo  th()  mnHNOH  hoo  Uh  truth,  but  liociiuHe  tlioy  ncco[it 
tlu)  ui>nuluHit)iiH  of  tlioHu  wlio  do  boo  it. 

TIk)  fact  is  tliiit  II  lur^o  body,  p(>ilm|m  a  uiajoiity  of  tliu 
cMbu-atud  few,  an;  ahuost  at  oiiu  willi  thi;  jiublU;  al  largo 
ill  unwittiiijL^ly  ao{'«'|itiiig  the  <lot!triiieH  of  tlio  [xipiilar  po- 
lilical  I'coiioiiiy.  Tlio  (lUCHtioii  is  lutt  bctwt'cu  iiitclliguiicu 
oil  till!  one  Hidi)  and  igiioraiu;e  on  th(!  otliur,  but  l>v  twecii 
the  liaiidful  of  men  wlio  have  iiindo  a  apucial  study  of 
ccouoiiiics  and  tliu  intolligeiico  of  the  country  at  hirgc. 
When  tliat  intelligeiu'o  is  won  over  U*  tlio  side  of  the 
economists,  wu  may  expect  with  entire  coiilideneo  that  the 
ideas  of  the  masses  will  soon  follow. 

We  must  therefore  recognize  three  classes  of  thinkers, 
—  the  professional  teachers  and  students  who  necessarily 
number  only  a  few  huntlrcds  or  thousands,  the  educated 
cliwses,  and  the  public  at  large.  So  far  as  the  professional 
teacher  is  concerned,  every  one  who  comes  within  the 
range  of  his  effective  instruction  —  every  one,  I  mean, 
whom  he  really  has  a  clianee  to  train  in  methods  of  syste- 
matic thought  —  maybe  considered  as  belonging  to  the  ed- 
ucated class.  The  practical  question  before  us  is,  therefore, 
how  ecouomio  science  should  be  taught  to  the  mass  of  stu- 
dents in  our  colleges  and  schools.  This  is  a  question  on 
wliioh  the  writer  touches  with  great  diffidence,  for  the 
I'easou  that  his  conclusions  are  not  those  of  n  professional 
teacher  or  student  of  the  subject,  but  only  those  of  oue 
who  has  always  taken  an  interest  in  the  study  of  popular 
habits  of  thought.  Hence,  even  should  his  ideas  of  the 
disease  be  well  founded,  those  of  the  remedy  will  neces- 
sarily lack  the  basis  of  positive  experience.  Still,  for  the 
sake  of  opening  a  discussion  which  he  hoj)e8  will  be  con- 
tinued by  abler  and  more  experienced  pens,  he  will  vent- 
ure a  few  suggestions. 

First  of  all,  he  would  submit  the  question  whether  the 
recent  reaction  aguinst  the  teaching  of  abstract  principles, 
and  the  substitution  of  wide  instruction  in  history,  admin- 


J! 


24 


istration,  and  the  general  facts  of  the  social  organism  for 
a  study  of  those  principles,  has  not  served  to  lessen  the 
influence  of  economic  thinking  upon  tlie  educated  public. 
The  popular  political  economy,  not  being  based  upon  wide 
study  of  any  sort,  but  upon  a  few  Simple  principles,  can 
best  be  met  on  its  own  ground  by  showing  the  fallacies  on 
which  those  principles  are  based.  In  the  very  fact  that 
education  and  intelligence  do  not  seem  to  have  weakened 
the  hold  of  the  popular  political  economy  on  the  public 
mind  we  liave  good  evidence  that  mere  increase  of  intel- 
ligence will  not  sullice  to  eradicate  it.  What  we  want  is 
better  training  in  the  art  of  right  thinking.  Tliis  training 
cannot  be  given  by  the  n.ere  teaching  of  facts.  A  person 
can  no  more  be  trained  '"to  a  thinker  by  lecturing  to  him 
than  he  can  into  a  gymnast.  A  student  may  know  the 
whole  history  of  money  and  banking,  and  be  acquainted 
with  the  laws  of  the  leading  nations  relating  to  these  sub- 
jects, without  being  able  to  trace  the  effect  of  free  coinage 
of  silver  upon  trade  and  industry.  He  may  be  able  to 
repeat  the  arguments  for  and  against  bimetallism  without 
being  able  to  judge  which  should  prevail  in  a  given  case. 
He  may  be  profoundly  acquainted  with  the  economic 
policies  of  all  the  great  nations,  and  yet  be  unable  to 
refute  the  fallacies  into  which  the  farmer's  boy  falls  in 
talking  of  trade  and  industry.  The  one  thing  needful  is 
a  thorough  drill  in  following  mentally  the  operations  of 
production,  exchange,  transportation,  distribution,  and 
consumption.  The  current  popular  reasoning  on  eco- 
nomic subjects  is  often  sound  so  far  as  it  goes;  it  fails 
from  considering  only  a  part  of  the  case.  The  student 
should  be  able  to  point  out  to  the  plain  man  just  where 
this  fault  begins,  and  what  the  result  will  be  when  indi- 
rect as  well  as  direct  effects  are  considered. 

It  is  also  desirable  that  the  student  be  taught  not  only 
to  think  rightly  and  reach  correct  conclusions,  but  to  ana- 
lyze and  expose  popular  fallacies.     He  should  be  able  to 


■-:i:: 


26 


ra 


point  out  to  the  intelligent  but  not  siiecially  trained  man 
wherein  the  latter  reasciis  wrongly  when  he  reaches  such 
conclusions  as  that  the  law  requiring  all  copyright  books 
to  be  wholly  manufactured  in  this  country  is  a  benefit 
to  our  industry,  and  that  the  employment  of  the  cheap 
labor  of  industrious  foreigners,  like  the  Chinese,  will 
reduce  the  standard  of  living  of  our  own  laboring  classes. 
It  is  a  remarkable  fact  that  Bastiat  seems  to  have  been 
almost  the  only  well-known  writer  who  .has  thus  at- 
tempted to  attack  popular  fallacies  on  their  own  ground, 
and  make  them  evident  by  modes  of  reasoning  of  the 
same  kind  which  the  public  habitually  employ.  Proba- 
bly these  writings  were  better  known  to  the  students 
of  the  last  generation  than  they  are  to  those  of  the  pres- 
ent time.  If  this  is  so,  and  if,  as  the  writer  supposes, 
they  are  the  only  writings  of  their  kind  extant,  we  have 
a  very  good  explanation  of  the  reaction  of  our  own  gen- 
eration against  the  fundamental  principles  of  economic 
science.  The  direction  which  the  present  writer  believes 
that  elementary  economic  teaching  should  take  may  be 
made  more  evident  by  so'.ne  examples  of  the  propositions 
which  he  holds  should  be  taught  to  or  discussed  by  stu- 
dents.    Such  propositions  are  :  — 

That  the  exports  of  a  country  will,  in  the  long  run,  approximately 
balance  the  imports,  no  matter  what  restrictions  may  be  placed  upon 
the  latter. 

That  the  ultimate  effect  of  such  restrictions  is  to  make  exports 
less  profitable :  hence  that  the  so-called  balance  of  trade  needs  no 
regulation,  and  that  there  is  no  danger  of  our  interests  suffering 
from  an  excess  of  imports. 

That  no  raising  of  wages  is  of  permanent  benefit  to  the  masses 
unless  accompanied  by  an  increase  in  the  production  of  things  for 
the  masses  to  eat,  drink,  and  wear. 

That  every  increase  in  the  production  of  those  necessaries  of  life 
which  the  masses  find  rt  hard  to  obtain  mtkes  their  command  easier 
to  some,  and  places  them  within  the  reach  of  others;  while  every 
cause  which  has  the  effect  of  diminishing  such  production  will  compel 
some  class  to  go  with  less  of  them  than  they  would  otherwise  enjoy. 

That  the  value  of  every  industry  is  to  be  measured,  not  by  the 


r 


'! 


26 


employment  it  gives  to  labor,  but  by  the  usefulness  of  its  prod- 
uct ;  in  fact,  that  the  employment  shows  wie  cost  of  the  industry, 
not  its  utility. 

That  the  employment  of  the  unemployed  at  the  public  expen&o 
would  be  of  no  permanent  benefit,  unless  the  result  of  their  labor 
could  be  sold  for  at  least  its  cost. 

That  there  is  plenty  of  employment  for  e\orybody,  if  men  only 
had  the  wages  to  pay  them,  so  that  what  is  called  want  of  work 
really  means  want  of  money  to  pay  for  the  work. 

That  the  lower  the  wages  demanded  in  any  employment,  tiie 
greater  the  number  of  people  who  can  find  employiueiit  at  those 
wages ;  and  the  higher  the  wages  demanded,  the  less  the  number. 

That  the  supposed  beneficial  eifeits  of  an  increase  of  currency 
upon  business  would  only  prove  temporary,  and  would  be  followed  by 
a  depression  corresponding  to  the  stimulus  which  business  had 
received. 

That  prices  are  determined,  in  the  general  average  and  the  long 
run,  by  the  quantity  of  any  article  produced  and  the  demand  of 
the  public  for  it ;  that  any  attempt  to  artificially  raise  the  price  of 
any  service  whatever  above  the  limit  thus  fixed  will  result  in  a 
diminished  consumption,  and  hence  in  a  diminished  production, —  in 
other  words,  that  you  cannot  get  the  public  to  accept  more  than  a 
certain  quantity  of  service  or  goods  at  any  definite  price,  which  quan- 
tity diminishes  with  the  price. 

That  there  is  no  possibility  of  a  general  increase  in  the  demand 
for  labor  except  by  measures  which  would  speedily  neutralize  their 
own  effects,  and  that  attempts  to  promote  or  encourage  one  branch 
of  industry  by  making  it  more  necessary  only  result  in  an  equal 
discouragement  to  other  branches. 

That  a  commercial  marine  is  of  no  benefit  to  us  except  thiough 
bringing  to  our  shores  the  products  of  other  nations  which  we  wish 
to  enjoy. 

In  general,  that  industry  is  of  no  use  to  us  except  by  producing 
things  that  we  need;  and  that,  if  we  can  get  those  things  without 
the  industry,  so  much  the  better,  because  we  shall  then  have  more 
time  to  produce  yet  other  things  which  we  had  not  previously 
enjoyed. 

That  a  Chinaman  who  should  work  for  nothing  would  therefore 
be  a  benefactor  to  us  all,  being,  in  fact,  so  far  as  we  are  concerned, 
a  sort  of  labor-saving  machine. 

In  fine,  that  the  great  improvements  which  the  present  generation 
has  witnessed  in  the  condition  of  the  laborer  are  due  to  cheapened 
production,  whereby  everything  we  need  is  gained  with  less  industry 
tha.n  was  formerly  necessary. 


r" 


^ 


27 


It  is  not  claimed  that  such  propositions  should  be 
taught  dogmatically,  as  if  they  were  theorems  of  geom- 
etry. Not  only  sliouid  their  limitations  he  pointed  out, 
when  necessary,  but  the  student  should  be  encouraged  to 
find  or  even  to  imagine  conditions  under  which  the  max- 
ims would  fail.  In  doing  this,  the  vice  he  should  be 
taught  to  avoid  is  that  of  concluding  that  because  he  can 
imagine  a  state  of  things  under  which  a  maxim  would 
fail,  therefore  it  is  worthless.  It  is  also  suggested  that 
all  branches  of  economic  learning  are  not  equally  valuable 
for  the  special  end  in  view.  Much  that  is  said  of  such 
subjects  as  laws  of  distribution,  utility,  disutility,  profits, 
and  oost  of  production,  however  interesting  and  valuable 
to  the  teacher  and  professional  student,  can  be  of  little  use 
to  the  general  student  because  he  has  not  time  to  master 
and  digest  it.  Of  still  less  use  t^  him  is  the  history  of 
economic  theory,  except  so  far  as  it  may  bear  upon  the 
problems  of  our  o\(rn  time.  On  the  other  hand,  the  study 
of  the  life  and  condition  of  various  classes  of  men,  both 
past  and  present,  afford  valuable  lessons  which  are  too 
much  neglected.  But,  as  in  the  case  of  all  other  facts, 
those  of  history  are  valuable  only  as  they  afford  a  means 
of  understanding  the  present  and  inferring  the  future. 


